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The Prevalence and Cost of Mandated Benefits

By November 3, 2010Commentary

Why do we spend so much on health care and why does health insurance cost so much.  While governments like to beat on insurers, government regulations are responsible for a lot of the cost increases for health care coverage.  Governments have restricted insurers’ ability to limit what providers are available or what kind of care management can be used and have mandated coverage of services that may or may not be necessary.  The Council for Affordable Health Insurance released another report on the prevalence and cost of mandated benefits.   (CAHI Report)

In total, the report identifies 2156 mandated benefits across all states in 2010, up from 2133 in 2009.  Rhode Island, Maryland and Minnesota lead the way with over 64 mandates each.  Idaho and Alabama are laggards, depending on your point of view, with 13 and 19 respectively.  The most common areas are breast reconstruction, mammography, mental health parity and maternity minimum stay.  Most mandates increase premiums by less than a per cent, but when there are multiple mandates the effect adds up.  Some, like mental health parity, now a federal mandate, raise premiums by 5% or more.

There is some good news.  About 30 states require that the cost of a mandate be assessed before being implemented and around ten allow the sale of mandate-lite policies.  While many mandates seem to require coverage of needed services, often they restrict insurers ability to limit coverage to items which are appropriate and beneficial and to put conditions on coverage, and they facilitate fraud and abuse by providers and members.  If we really want to limit health spending, insurers need to have the ability to put reasonable limits on what gets paid for.

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